Corporation of India Vs. The Union of India & Ors  INSC 207 (6 April 1998)
A.P. Misra K. Venkataswami,J.
O R D
two appeals arise out of an order dated 9.12.94 of the Kerala High Court in
Writ Appeal No. 664/91 and O.P.No. 7523/89. The questions that arose for
consideration before the High Court in Writ appeal No. 664/91 were
whether the Food Corporation of India (for short 'FCI'), the appellant herein,
for the purposes of application of the provisions of the Employees' Provident
Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred to as the
"Act") would be an 'establishment' and
31 headload workers (workers in question for short) engaged b y the Contractor
in loading and unloading operation at Kuttipuram Railway Station would be
regarded as 'employees' of the FCI within the meaning of Section 2(f) of the
act and consequently liable to remit the contributions required under the act.
The latter question required under the act.
latter question alone was agitated before us.
question for consideration before the Kerala High Court in O.P. No. 7523/89 was
whether the Contractor (petitioner in the said O.P.) was entitled to refund of
security deposit amounting to Rs.1,35,000/- with interest at 12% p.a. from the
view we propose to take, we do not intend to deal with the matters elaborately.
As the question of refund of security deposit was inter-related withe the
question relating to the liability or otherwise of the FCI under the Act as
referred to above, the High Court decided the two matters by a common judgement
and for the same reason we have also dealt with these two appeals by this
the second respondent, Regional Provident Commissioner, fixed the liability on
the FCI under the Act on the basis of a Report given by the Provident Fund
Inspector prepared behind the back of the appellant. It was challenged before
the High Court. A Division Bench of the Kerala High Court in Writ Appeal No.467/85
dated 13.10.87 set aside the assessment made by the second respondent and
remanded the case to the Provident Fund Commissioner with a direction that if
the proposes to rely upon the Inspector's Report, a copy of the same should be
furnished to the appellant and an opportunity of showing cause of being heard
should also be afforded to the appellant before rendering a final decision.
Accordingly, the second respondent after issuing the show-cause notice and
supplying a copy of the Inspection Report and after giving an opportunity to
the appellant again found that the appellant was the real employer of the said
31 headload workers through the Contractor and as such, liable to pay the
contributions under the act. For coming to this conclusion, the second respondent
placed reliance on an alleged agreement entered into between the FCI and the Union representing the railway goods shed workers.
Principally, based on the said agreement, the decision of the second respondent
was rendered. We may at once point out that through notice was served on the
second respondent, none appeared and assisted the Court when these appeals were
heard by this Court. There is nothing on record to evidence the said agreement.
It is also denied by the appellant that there was any such agreement which will
show that the appellant was the real employer of the 31 headload workers
through the Contractor.
by the order of the second respondent, the appellant filed O.P. No.10332/88-E
before the Kerala High Court. The learned Single Judge, after referring to the
role played by the FCI in settling the dispute between the workers and the
Contractor, reached a conclusion that the workers in question are the employees
of the FCI through the Contractor and, therefore, the second respondent was
justified in fixing the liability on the appellant. Still aggrieved, the
appellant preferred Writ Appeal No.664/91 before the Division Bench of the same
High Court. The Division bench noticed the facts as follows:- "It is
submitted that the workers in the Railway shed do loading and unloading work in
respect of wagons and not exclusively in respect of wagons containing the
petitioner's goods. These workers are not engaged by the petitioner-
Corporation but by the independent contractors who have contracted with the
petitioner to do the loading and unloading operations.
independent contractors enter into contracts for the Handling and Transport of Foodgrains
for specific periods. The persons are engaged by the contractors and the
petitioner-Corporation has no say in the engagement of the workers.
the only question is to proceed further on this undisputed position for the
decision of the questions spelled out hereinbefore." However, while
deciding the issue the Division Bench observed as follows:- "It is on
record, as has been also sought to be taken up by the learned Judge for support
to the conclusion that the 31 persons are employees, that the Corporation has
intervened in the matter of settling the disputes between the contractors and
the workers the learned Judge observes that the intervention is justifiable
because the Corporation is under an obligation to see that the foodgrains are
distributed properly at proper time and any stalemate caused by the disputes
between the workers and the contractors will affect the system of distribution.
additional aspect also, in our judgement lends assurance to the conclusion
reached, on the admitted to the conclusion reached, on the admitted pleadings
that the 31 workers are employees of the Corporation under the extended
definition." Section 2 (e) and (f) of the Act define 'employer' and
'employee' as follows:- "2(e) "employer" means - (i) in relation
to an establishment which is a factory, the owner or occupier of the factory,
including the agent of such owner or occupier, the legal representative of a
deceased owner or occupier and, where a person has been named as a manager of
the factory under clause (f) of sub- section(1) of Section 7 of the Factories
act, 1948, the person so named; and (ii) in relation to any other
establishment, the person who, or the authority which has the ultimate control
over the affairs ate entrusted to a manager, managing director or managing
agent, such manager, managing director or managing agent;
"employee" means any person who is employed for wages in any kind of
work, manual or otherwise, in or in connection with the work of an
establishment, and who gets his wages directly or indirectly from the employer,
and includes any person-- (i) employed by or through a contractor in or in
connection with the work of the establishment;
engaged as an aprentice, not being an apprentice engaged under the Apprentices
Act, 1961, or under the standing orders of the establishment." As already
pointed out, no materials are placed before us and we do not find that any
material was placed before the High Court to come to a conclusion that there
was an agreement between the FCI and the Union representing the railway goods
shed workers to hold the FCI as employer of the workers in question in the
light of the definitions of 'employer' and 'employee' in the Act. Further, in
the counter affidavit filed in this Court on behalf of Respondents 1 and 2 in
paragraph 8, it is stated as follows:- "These employees were doing
exclusively the work connected with the Food Corporation of India and wages of
these employees were paid by the contractors engaged/appointed legally by the
Food Corporation of India. There were even agreement subsisting between the
Food Corporation of India and the union representing the employees working in
the Railway Goods shed on their demands. The employees engaged by or through
the contractors, therefore, fall within the definition of "employee"
as per Section 2(f) of the Employees' Provident Funds and Miscellaneous
Provision Act, 1952." Again, expect the averment as above, no material is
placed before us to decide the issue. In the absence of materials, we are of
the view that the High Court was not justified in assuming certain factors to
fix the liability on the FCI without appreciating the relevant provisions in
the Act. Likewise, in the absence of materials before us we do not want to
decide the issue finally and, therefore, we set aside the order under
appellants remit the matter to the Division Bench for fresh hearing. The
parties are at liberty to place before the High Court all relevant materials to
substantiate their respective contentions. As the question of refund of the
security deposit is inter-related with the decision regarding the liability of
the FCI to pay the contribution under the Act, that matter will also be heard
by the Division Bench in O.P. No. 7523/89 is also set aside and the matter is
remanded to be heard along with Writ Appeal No.664/91.
appeals are allowed accordingly with no order as to costs.